Statement by Senator Carl Levin on Citigroup and JPMorgan Chase Settlements

WASHINGTON – Sen. Carl Levin, D-Mich., issued the following statement today:

Last year, the U.S. Senate Permanent Subcommittee on Investigations determined that Citigroup and JPMorgan Chase helped Enron mislead investors by knowingly constructing complex deals that improperly inflated Enron's financial results. The settlements announced today by the SEC and Manhattan District Attorney reach the same conclusion. These settlements force Citigroup and JPMorgan Chase to disgorge profits and pay a penalty, and prohibit them from using deceptive structured finance transactions with other clients.

I am pleased that federal and state securities regulators placed a priority on taking action against major U.S. financial institutions that knowingly participated in deception transactions with Enron. Citigroup and JPMorgan Chase were not the only financial institutions to participate in Enron's chiseling, and these settlements are only the latest in what will likely be a long series of enforcement actions arising from the financial scandals of the last two years. These settlements underscore a key issue – that financial professionals, including banking, securities, accounting and law firms, cannot pretend to be disinterested third parties and hope to get off scot free when designing, financing or facilitating deceptive financial transactions for their clients. These settlements send the clear message that U.S. bankers, brokers, accountants and lawyers have an obligation to analyze and understand the consequences of their actions, and they will be held accountable for deceptive transactions. The settlements make it clear that using deceptive structured financial deals is a violation of law that will be punished.

Corruption has not been limited to Enron. The process of restoring investor confidence has begun, but we still have a lot of steps that need to be taken, including enactment of stronger SEC enforcement authority as set out in my legislation, S. 183, which passed the Senate as part of the CARE Act and is awaiting action in the House.